The European Union and Mexico agreed on Friday to launch negotiations towards a new free-trade agreement, as Mexico seeks to avoid being sidelined by Europe's bigger trade deals with the United States and Canada.

Following the collapse of global trade talks, the world's biggest economies are seeking to sign a patchwork of bilateral and regional deals to lift economic growth and compete with China, which the West sees as too dominant in commerce.

"With the United States and Canada being two of our biggest partners, it would be an omission not to modernize Mexico's agreement," Mexican President Enrique Pena Nieto told a news conference after an EU-Mexico summit in Brussels.

"Mexico has to align with them," he said of the United States and Canada, with which Mexico signed the North American Free Trade Agreement two decades ago.

Building on a pact with Mexico from 2000, the European Union hopes to add Mexico City to an emerging transatlantic free-trade zone. Negotiations could start at the end of the year.

Mexico is also moving ahead of Brazil, whose talks towards a similar deal with the European Union have stalled, although efforts are being made to restart those negotiations.

As with the EU's pact with Canada and its plans for a deal with the United States, a new accord with Mexico would further open up markets in services and allow businesses to bid for public tenders in each others' countries.

Such accords go beyond trade and tariffs to integrate economies to adapt to global supply chains in which many elements from a range of countries make up a final product.

A more comprehensive deal with the European Union would allow Mexico to join Colombia and Peru in having modern trade pacts with the European Union and the United States.

Mexico buys most of its goods from the United States and China, but the European Union remains a way for Mexico to reduce its reliance on the world's two biggest economies.

The European Union has signed an ambitious trade accord with Canada that must be ratified. It is negotiating an even larger pact with the United States, which if agreed would be the largest of its kind, encompassing almost half the world's economic output and a third of global trade.